The Monetary Authority of Singapore ( MAS ) on August 3 announced it will issue on October 1 this year the first Singapore Government Securities ( SGS ) under the Significant Infrastructure Government Loan Act ( SINGA ).

The inaugural SGS ( Infrastructure ) will be a new 30-year benchmark bond, and the MAS will announce the issuance size five business days before the auction on September 28 2021. The first offering will not be a green bond, according to MAS, and the first green SGS ( Infrastructure ) issuance under the SINGA will be next year.

The Parliament passed the SINGA on May 10 this year, authorizing the government to borrow up to S$90 billion ( US$66.67 billion ) over the next 15 years to finance major, long-term infrastructure, such as new rail lines and coastal protection infrastructure to protect Singapore against rising sea levels.

Borrowing under the SINGA will allow the government to spread out the lumpy costs of infrastructure across generations. This is, according to MAS, both a fair and efficient approach. It is fair because payments are borne by the generations who will benefit from the infrastructure, and efficient because with Singapore’s AAA rating and the current market environment, it is likely to be able to tap the debt market at favourable interest rates.

Under the SINGA, a new category of SGS, named SGS ( Infrastructure ), will be issued. The existing SGS will be renamed as SGS ( Market Development ). The SGS ( Infrastructure ) will have similar key features as SGS ( Market Development ). The recourse to investors is the same – they will be backed by government assets and SGS ( Infrastructure ) and SGS ( Market Development ) will enjoy the same tax and regulatory treatment. Both can be used by financial institutions as high-quality liquid assets to meet regulatory requirements and would be accepted as eligible collateral at MAS facilities.

Also, SGS primary dealers’ market-making and underwriting arrangements would apply equally, and they would have similar access to the enhance repo facility ( ERF ). Given the similarities, SGS ( Infrastructure ) would be priced along the existing SGS ( Market Development ) yield curve.

MAS will calibrate the overall issuance of SGS ( Infrastructure ) and SGS ( Market Development ) holistically, so that overall supply would be sufficient to cater to prevailing investor demand and market conditions.